9911796707
TMI Blog2005 (10) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid report in the eye of law and in the absence of any other contrary material brought on record by the revenue, we do not find any infirmity in the order of the Ld. CIT(A) in relying on the remand report furnished by the Assessing Officer and in accepting the claim of the assessee. We are of the view that the revenue has failed to substantiate its claim that the silver utensils do not exist, neither transported from Kolkata to Delhi nor sold to Delhi merchants and the alleged sale proceeds is nothing but an accommodation entry. As a matter of fact, the Assessing Officer in the remand report has finally accepted that the silver utensils were properly disclosed, it was transported by trucks as evidenced by consignment notes, the same was delivered at Delhi which was also confirmed by the consignees and there is no direct evidence to show that the jewellers of Delhi have given accommodation entries to the assessee. Besides this, the Assessing Officer while disallowing the long-term capital loss on sale of such silver utensils has accepted that such loss is loss on sale of personal effects. Under these circumstances, we are of the view that assessee has discharged his burden that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls ..... Rs. 3,46,83,900 (ii) It was stated by the assessee that the assets declared under VDIS, 1997 have been sold in financial year 1997-98 relevant to assessment year 1998-99 and such sale proceeds have been credited in the books as above. From the details of sale of silver utensils filed, it was found by the Assessing Officer that silver utensils have been sold to various jewellers at Delhi as below: Name address of buyer Quantity of silver sold Kg. Sale proceeds Transporter from Calcutta to Delhi M/s. Shree Shyam Co. 1157, Kucha Mahajani, Chandni Chowk, Delhi-110006. 560.000 3360000 R.T.C. Calcutta Shri Tirupati Balaji Co., 19, Katra Chouban, Chandni Chowk, Delhi-110006 1489.985 10463538 R.T.C. Calcutta Panna Lal Banarasi Das, 419, Katra Chouban, Chandni Chowk, Delhi-110006 640.000 4233600 Gupta Trading Co., 1166, Kucha Mahajani, Chandni Chowk, Delhi-110006 689.850 4680632 R.T.C. Calcutta J.K. Carriers, Calcutta Jhunjhunwal Sons A1/11, Golden Park, Shiv Puri, Delhi-51 760.000 5130760 Rajeshwari Jewellers, 1168, Kucha Mahajani, Chandni Chowk, Delhi-110006. 1014.003 6815370 R.T.C. Calcutta Total 5153.838 34683900 (iii) To verify the genuineness of the above sale transaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave entries of consignments belonging to Dalmias and the Tolly Register was impounded under section 131(3) of the Act. The Booking Registers showing all the booked consignment did not have any entry of the consignment of Dalmias. Sri Trilok Agarwal, General Manager of the aforesaid booking office, in his statement under section 133A could not state the place of loading operation and admitted having loaded the goods at Dalhousie as well as at Howrah which was held as untrue by the Assessing Officer for the reason that Sri N.P. Dalmia in his statement under section 131 has stated in answer to question No. 29 that the loading of silver utensils was carried out at 2/3, Sarat Bose Road and 52E, Ballygunge Circular Road. The Assessing Officer has observed that the partners of M/s. Road Transport Corporation are close relatives of Dalmias and Sri Yashbir Goel is the father-in-law of son of Sri N.P. Dalmia. Sri Trilok Agarwal, General Manager of the booking office of RTC stated that he did not recollect the place where silver utensils were loaded. He could not furnish the address of the sender of New Delhi wherefrom these consignments have been delivered. The survey under section 133A in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Roadways was recorded wherein he stated that he did not know anything about M/s. J.K. Carriers and has not heard the name of this concern. The statement of Sri J.K. Sharma, proprietor of J.K. Carriers was recorded under section 133A on two different dates and he has stated that he has destroyed all the books of account, namely, Consignment Note Register and Cash Book relating to the business of M/s. J.K. Carriers of the relevant period. He stated that he does not remember any party for whom he has worked as transporter. Sri J.K. Sharma in his statement under section 132(4) on 21-1-2000 admitted that he arranged necessary papers i.e., lorry challan etc. on the request of Sri N.P. Dalmia and has handed over the same to the Dalmias and he was paid Rs. 5 per kg. for providing necessary paper work. He has categorically stated that he has never transported silver utensils of Dalmias to Delhi and in order to make the Scheme look genuine, he has done elaborate paper work. C. Enquiries in the case of Dalmia family: Statement of Sri S.S. Dalmia was recorded under section 132(4) in Delhi on 31-8-1999 wherein he has stated that he did not know the quantum of silver utensils declared by him or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J.K. Sharma that he never transported silver utensils to Delhi and has charged Rs. 5 per Kg. to provide the paperwork to the Dalmias. Enquiries made in the case of M/s. Road Transport Corporation and M/s. South Eastern Roadways do not show any such transportation of goods by their trucks. The statement of Shri S.S. Dalmia was recorded in which he stated that silver utensils were acquired 15/20 years back whereas in the VDIS declaration the year of acquisition of silver utensils has been shown as 1962-63, which is about 36/37 years back. He has shown unawareness to the point of loading or mode of receipt of sale proceeds. There is a major discrepancy regarding the period of acquisition as admitted by Shri S.S. Dalmia and the period shown in the VDIS, 1997 declaration. Enquiries made in the case of jewellers of Delhi show that they cannot accommodate and transact so many tons of silver utensils. (v) Accordingly, the Assessing Officer was of the view that the alleged sale proceeds of silver is nothing but unexplained cash credit in the hands of the assessee and, therefore, he added Rs. 3,46,83,900 in the income of the assessee as income from other sources. Beside this, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the trucks engaged by M/s. Road Transport Corporation (RTC) for carrying silver utensils to Delhi never passed through Naubatpur and Ghaziabad check posts, clearly established that the silver utensils never reached to Delhi for sale from Calcutta and, therefore, the silver utensils allegedly sold never existed. He further submits that the statement of Sri S.S. Dalmia, the related assessee was also recorded in which he stated that he did not know the quantum of silver utensils declared by him or HUF. He was not knowing the sale proceeds received out of sale of silver utensils. He does not know even the name of the valuer. When Sri S.S. Dalmia was asked as to when the silver utensils were acquired, he stated that these were acquired 15-20 years back but the year of acquisition shown in VDIS declaration is 1962-63 which is about 36-37 years back. This proves that the VDIS declaration was false and no silver utensils were available with Sri Dalmia and his family members in 60s. The Ld. Departmental Representative further submits that enquiries were also conducted from jewellers of Delhi to whom silver utensils allegedly sold by the assessee. It was found that huge amount of cash h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and a certificate relating to the same was issued. It may be stated that more or less similar disclosures under the said Voluntary Disclosure Scheme were made by the three related assessees also namely Shri Shyamsunder Dalmia, H.U.F., Shri Narain Prasad Dalmia, H.U.F. and Shri Madhusudan Dalmia, H.U.F. In the said three cases also apart from diamonds, gold bars etc. silver utensils were disclosed and such disclosures were also accepted in those three cases. In those three cases about Rs. 85,55,000 was paid on account of tax on such undisclosed income. 6.1 He further submits that on diverse occasions during the relevant financial year the assessee so also the other three connected assessees as aforesaid sold the undisclosed silver utensils, diamonds and gold bars and sale proceeds thereof were disclosed in his return for the assessment year 1998-99 and the capital gain or loss arising from sale of such undisclosed assets was claimed. He further submits that there is no controversy as to the voluntary disclosure made by the assessee and the others. Such voluntary disclosure has been duly accepted. Tax paid on the basis thereof and sales of all other assets like diamonds and gold ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e truck carrying the silver utensils; the shops of the silver merchants were too small to accommodate such huge quantity of the silver utensils; the quantity of such utensils was huge. The Assessing Officer and the search officials at time of the several searches had examined the valuer, transporters and the silver merchants. The Assessing Officer contrary to results of such investigation held that the assessee had sent his undisclosed cash to the Delhi merchants who had obliged him by paying by cheques and drafts as alleged sale proceeds of the silver utensils, which according to the Assessing Officer neither existed nor transported nor sold. 6.4 The Ld. Counsel for the assessee further submits that at the stage of the hearing of appeal before the Ld. Commissioner of Income-tax (Appeals) in the case of the others so also in the case of the assessee detailed submissions were made on behalf of the assessee bringing on record numerous substantial facts and evidences to controvert the allegations of the Assessing Officer. The Ld. CIT(A) sent all such evidences, documents, facts and submissions of the assessee to the Assessing Officer for his comments and the Assessing Officer submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been disputed and accordingly, apart from the fact that in the remand report the retraction statement of Shri Kothari is taken as acceptable there is nothing turns wrong on the valuation aspect as such. 6.7 He further submits that it would further appear from the computation filed by the assessee appearing at page 4 in the paper book submitted by the department that substantial capital gain of over a crore of rupees was disclosed by the assessee on disposal of other disclosed item under the Voluntary Disclosure Scheme namely diamonds. The loss suffered on disposal of the gold disclosed under the Voluntary Disclosure Scheme was also shown in such computation. Such profits or gains had been computed by indexing the cost of acquisition as disclosed in the Voluntary Disclosure Scheme. The Assessing Officer has accepted the capital gains made after indexation and the loss suffered on disposal of the diamonds and gold disclosed under the Voluntary Disclosure Scheme. It is only the transactions relating to the silver utensils which has been disputed which after indexation resulted in loss. The total quantity of the silver utensils disclosed under the Voluntary Disclosure Scheme was 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or referred to the statements which supported the case of the assessee is very much evident from the remand report. It was further pointed out that the money receipts given to the transporters on receipt of the consignments by the firms at Delhi had totally been ignored which on verification were found to be correct. These facts were accepted in the remand report, appearing at pages 164 to 170 of the paper book and the relevant extracts of which are at internal pages 3-4 of the said remand report. 6.9 Further the fact that the trucks carrying the silver utensils were weighed at the Dharamkanta at Delhi and weighment slips were issued which were after investigation found to be correct was also altogether ignored by the Assessing Officer and even not referred to. This fact has also been accepted in the remand report vide 5th new para appearing at internal page 4 of the remand report, appearing at page 167 of the paper book. Copies of the various statements and other documents in respect of transportation like delivery charges receipts, dharamkanta weighment slips are also filed in the paper book of the assessee and appearing at pages 35 - 43, 55 - 70, 90 - 103, 125 - 126, 129 - 130, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laces for storing the articles and they deal in them as bullion after melting are on record and have not been controverted by the department. Transactions of sale of silver bullion are effected in cash has been confirmed by the Bullion Merchants Association and comment by Assessing Officer in the order of assessment on that score has no relevance. It has been accepted that in spite of searches conducted at different places no incriminating document was found. The silver utensils were also not found with the assessee at the time of search made prior to the assessment. The transactions were affirmed by the purchasers, transportation of the goods to Delhi were established by the money receipts of the consignees, weighments at Dharamkanta and other documents. The silver merchants had paid sales tax and are income-tax assessees. Therefore, the identity of the payees is established, payees have confirmed the transactions, there is no evidence to show any cash being paid by the assessee, the silver utensils were accepted in the disclosure and the factum of disclosure or the contents thereof has not been and cannot be disputed. The only surmise sought to be indulged is the quantity of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assesses before the Ld. CIT(A). The Assessing Officer in pursuant to the Ld. CIT(A)'s letter dated 1-10-2001 has submitted the remand report dated 9-11-2001 through Addl. CIT(C) which reads as under: OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-XXVIII, 18 RABINDRA SARANI, CALCUTTA-700 001 No. CC-XXVIII/RQ-4134-CAL./2001-02/585 Dated : 9-11-2001 To, The Commissioner of Income-tax (Appeals) Central-1 Calcutta. Madam, Through Addl. C.I.T. (C), P-II, Calcutta Sub.: Suryakant Dalmia. Appeal No. 10 CC-XXVIII CIT(A), C-1 01-02 A.Y. 1998-99 Ref: Your letter No. CIT(A) C-1 2001-02/KOL. 264 dated 1-10-2001 and this office memo No. 536 dated 9-10-2001 Kindly refer to the above. 2. The assessee was requested to file a written submission particularly on the documents contained in the paper book filed before the CIT(A) and accordingly, interim short notes were filed on 11-10-2001. 3. Comments on the assessee's submission contained in the interim short notes are given as under: 4. Page 1 and upper portion of page 2: These are facts as per records. 5. Page 2 lower portion, page 3 and first two paragraphs of page 4: These are already contained in the assessment order. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this affidavit and also the statement under section 131 dated 8-2-2001 in the assessment order. In the said statement before Assessing Officer Shri Kothari referred to his retraction before DDIT on 14-3-2000 and stated that he saw the entire silver utensils and articles valued by him and asserted that his statement recorded on 18-1-2000 was under pressure and he disclaimed the same. He also stated that valuation reports were given after personal inspection' of the relevant items. 11. The assessee also pointed out that the statement of Ram Prakash Kothari, brother of Shri R.K. Kothari recorded under section 132(4) on 18-1-2000 (the date of search) in which he stated inter alia (Answer to Q. Nos. 5 6) that he was involved during the valuation period which was over many days was not considered by the Assessing Officer while disbelieving the retraction of Shri R.K. Kothari. 12. The claims of the assessee as discussed above are apparent from the records and the relevant statements. In view of the relevance of the statement under section 132(4) of Shri Ram Prakash Kothari recorded during the search and also the affidavit of Shri R.K. Kothari within six days of the recording of his st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment but no cross verification was made before assessment. As the assessee has filed copies of all the delivery charges in the paper book and as no verification was made earlier, cross verification was made from South-Eastern Roadways and they have since confirmed vide reply dated 23-10-2001 the veracity of the money receipts and also delivery to the parties indicated. Xerox copies of the delivery abstracts have been sent by them. They have also mentioned that the delivery transactions were recorded at Ramnagar Branch. They have furthermore pointed out that three money receipts do not pertain to this assessee but to the other three assessees of the Dalmia Group. The result of this cross verification goes in favour of the assessee's claim of transport and delivery of the goods. 17. As regards the statements of Shri Anil Kumar, Shri Anil Sethi and Shri Krishna Kumar Gupta recorded during the course of survey in the office of South Eastern Roadways, Delhi same have already been considered in the Assessment Order. However, as stated here-in-above the result of cross verification for transportation of goods goes against the statements of aforesaid persons. 18 B.J.K. Carriers 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001 of Shri Sharma to notice under section 133(6) dated 17-1-2001 issued by Assessing Officer in which he confirmed having transported goods for Dalmias from Calcutta to Delhi by road and explained the relevant matters. This matter has not been discussed or considered in the Assessment Order. 22. In the paper book the assessee has also filed the copies of weighing slips issued by Purana Dharmakanta Committee, Delhi in support of weighing the silver utensils before purchase by the jewellers at Delhi. These slips were also impounded by the DDIT (Investigation). However, there is no discussion in Assessment Order in this respect and no cross verification was made. Therefore, letters were written to the Dharmakanta Committee, Delhi and they have since confirmed the weighing and realization of the weighing charges. In view of this, the existence of silver utensils at Delhi before the sale cannot be ruled out. 23. (C) Enquiry at Check-Post, Uttar Pradesh 23.1 The result of enquiry in this respect has already been discussed and considered by the Assessing Officer in the Assessment Order. 24(D) Enquiries in the Case of Purchaser of Silver Utensils 24.1. The assessee has claimed that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 28. 1st Para at Page 11 of the Interim Short Notes: 28.1 In this paragraph the assessee has stated the following: 1. The Assessing Officer suppressed various statements and depositions which were in favour of the assessee: 2. The enquiries made at the check-post was on wrong facts in respect of wrong dates and the same was not made at all check-posts in U.P. The enquiries also revealed that at some check-posts no entries were kept in respect of trucks passing through the check-post: 3. No incriminating evidence was found in course of search either at the residence or in the office of the assessee: 4. The assets disclosed under VDIS'97 were not found at the time of search: 5. There is no evidence to show that the cash deposited by the jewellers at Delhi in their Bank Accounts belongs to the assessee: 6. There is no evidence to show that the cash deposited was not their sale proceeds of silver utensils: 29. As discussed in earlier paragraphs some of the statements and evidence were not considered in the Assessment Order. Comments thereon have already been given: 30. It is apparent from records that enquiries were not made at all the check-posts. The letter issued by the Ghaziab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The silver was delivered by the said common carrier to the consignee at the destination at Delhi. Results of verification have already been discussed in the earlier paragraphs: (e) The consignee has confirmed having received the silver utensils through the said common carrier. Yes: (f) On search no silver utensils as disclosed in VDIS'97 were found with the appellant. This is a fact: (g) The appellant was not confronted with any evidence to establish that the cash deposited by the jewellers at Delhi in their Bank Account belonged to Dalmias and in fact there is no evidence to show that the cash deposited was not the sale proceeds of the silver utensils. As already stated there is no direct evidence in this regard 34. On the second issue of Long Term Capital Loss on the sale of silver utensils: The assessee has stated that the huge quantity of silver utensils itself shows that the same could not be personal effects and the same were in the form of investment made by the assessee for capital appreciation. 35. This claim of loss is consequential in nature. The disclosure of silver utensils was in tones. No evidence has been furnished in support of the claim that those were in for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that such silver utensils allegedly sold never existed. Such finding of the Assessing Officer is beyond his jurisdiction and against the scheme of the VDIS, 1997. We further find that even otherwise the finding of the Assessing Officer that Sri Raj Kumar Kothari, the valuer did not issue valuation report after physically seeing the entire silver utensils is not sustainable in view of paras 9 to 12 of the remand report of the Assessing Officer dated 9-11-2001 reproduced in para 8 of this order. 10. As regards, the Assessing Officer's observation that silver utensils have never been transported from Calcutta to Delhi, we find that these observations were made by the Assessing Officer without considering the affidavit/statements of Sri Trilok Agarwal and Sri J.K. Sharma, proprietor of J.K. Carriers. However, in the remand report the Assessing Officer has considered the same and has observed that the result of the cross verification goes in favour of the assessee's claim of transport and delivery of the goods. The existence of silver- utensils at Delhi before the sale cannot be ruled out vide paras 14 to 21 of the remand report reproduced in para 8 of this order. 11. Bes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion that it is not the case of the revenue that the remand report furnished by the Assessing Officer is not a valid report or not reliable or the view taken by the Assessing Officer in the remand report is not a possible view permissible under the law. It is also not the case of the revenue that the revenue should be provided one more opportunity to furnish a revised remand report, therefore, in the absence thereof, we are of the view that the remand report furnished by the Assessing Officer is a valid report in the eye of law and in the absence of any other contrary material brought on record by the revenue, we do not find any infirmity in the order of the Ld. CIT(A) in relying on the remand report furnished by the Assessing Officer and in accepting the claim of the assessee. 15. Before the Ld. CIT(A) the assessee has also filed copies of the Tribunal orders in the case of Shyam Sundar Dalmia, HUF v. Dy. CIT in [IT Appeal No. 2414 (Kol.) of 2002 dated 10-7-2003] for the assessment year 1998-99, Narain Prasad Dalmia v. DCIT [IT Appeal No. 50 (Kol.) of 2003 dated 23-9-2003] for the assessment year 1998-99 and Madhusudan Dalmia v. Dy. CIT in [IT Appeal No. 320/Kol./2003, dated 2-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of assessment proceedings. 18. On a query raised by the Bench as to show the outcome of the enquiries made in the case of jewellers of Delhi to whom the assessee has sold the silver utensils, the Ld. Departmental Representative has shown his inability to furnish the copy of such enquiry report or any other supporting material in this regard. At this stage, the Ld. Counsel for the assessee has also submitted that no such enquiry report was provided to the assessee. The Hon'ble Supreme Court in Kishinchand Chellaram v. CIT [1980] 125 ITR 713 has held at page 720 as under: ... It was true that the proceedings under the income-tax law are not governed by the strict rules of evidence and, therefore, it might be said that even without calling the manager of the bank in evidence to prove this letter, it could be taken into account as evidence. But before the Income-tax authorities could rely upon it, they were bound to produce it before the assessee so that the assessee could controvert the statements contained in it by asking for an opportunity to cross examine the manager of the bank with reference to the statements made by him.... 18.1 Since in the case before us, no su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the country of its birth. And as far as this country is concerned, the observation of Shah, J. in CIT v. Raman (1968) 67 ITR 11 (SC) are very much relevant even today. We may in this connection usefully refer to the judgment of the Madras High Court in M.V. Valliappan v. ITO (1988) 170 ITR 238, which has rightly concluded that the decision in McDowell (1985) 154 ITR 148 (SC) cannot be read as laying down that every attempt at tax planning is illegitimate and must be ignored, or that every transaction or arrangement which is perfectly permissible under law, which has the effect of reducing the tax burden of the assessee, must be looked upon with disfavour. Though the Madras High Court had occasion to refer to the judgment of the Privy Council in IRC v. Challenge Corporation Ltd. (1987) 2 WLR 24, and did not have the benefit of the House of Lords' pronouncement in Craven's case (1988) 3 All ER 493 (HL); (1990) 183 ITR 216 (HL), the view taken by the Madras High Court appears to be correct and we are inclined to agree with it. We may also refer to the judgment of the Gujarat High Court in Banyan and Berry v. Commissioner of Income-tax (1996) 222 ITR 831 at 850 where refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Therefore, what has to be enquired into by the Assessing Authority is about the nature and source of the deposit. If the explanation with regard to nature and source is found unsatisfactory only then the amount so credited may be treated as income. 23. Section 68 came up for consideration before various High Courts and it has been held that the assessee has to prove three conditions: (1) identity of the creditor, (2) capacity of such creditor to advance money; and (3) genuineness of the transactions. 24. If all the aforesaid three conditions are proved the burden shifts on the revenue to prove that the amount belong to the assessee. 25. It has been held by the various High Courts that the assessee cannot be asked to prove source of source or the origin of origin vide S. Hastimal v. CIT [1963] 49 ITR 273 (Mad.), Tolaram Daga v. CIT [1966] 59 ITR 632 (Assam), Sarogi Credit Corpn. v. CIT [1976] 103 ITR 344 (Pat. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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